Dean Baker's Blog, page 77

NYT Is Badly Mistaken: China Has Many Many Options in Trade War with Trump

The NYT erred badly with an article that told readers, "China Once Looked Tough on Trade: Now Its Options Are Dwindling." The article claims that China is running out of ways to retaliate against Trump's tariffs because it imports so much less from the United States than the United States imports from China. In fact, China has many other ways to retaliate.

The most effective would probably be to stop paying attention to patent and copyright claims of US corporations. It can encourage domestic...

Government Debt or Deficits Are a Problem When They Create Too Much Demand in the Economy

I usually have a policy of not using this blog to comment on pieces that cite me or someone else at CEPR, but I will make a brief exception in the case of this Heather Long piece on deficits and debt in the Washington Post. The point I had hoped to make, which is a view shared by left-Keynesians, is that debt or deficits are a problem when they generate too much demand in the economy. In that situation, we either have a problem with inflation or alternatively, the Federal Reserve Board has to...

The Best Way to Remove Corruption in Medicine: Take the Money Out

Former New England Journal of Medicine editor Marcia Angell had an op-ed in the NYT explaining how efforts to increase transparency had not ended the corrupting influence of money on medical research. Her piece describes various ways in which the researchers who get money from drug companies bend research to favor their benefactors.

While Dr. Angell suggests some reforms, there is an obvious one that is overlooked: take the money out. Drug companies have incentives to bend research findings b...

Samuelson Making Wrong Assertions on Consumer Spending and the Great Recession

Robert Samuelson gets it wrong yet again. In talking about the economic downturn following the collapse of the housing bubble, Samuelson tells readers:

"Home buyers had paid too much on the (false) assumption that prices would rise indefinitely. As real estate valuations crested in 2006, homeowners had to divert more of their income to repaying their mortgages and home-equity loans. Other consumer spending suffered."

Folks who have access to the data on the Commerce Department's website kno...

The Folks Who Missed the Last Financial Crisis Are Warning About the Next One

This NYT piece is so confused it is difficult to know where to begin. It starts with student debt. Student debt is a serious burden for many recent grads and even more so for people who did not graduate. But how does it lead to a financial crisis? As the piece notes, most of the debt is owed to the government. Also, defaults won't lead to the value of the underlying asset (earnings) spiraling downward.

Then we get corporate debt. Yes, this is high, but debt service as a share of corporate pro...

The Folks Who Missed the last Financial Crisis Are Warning About the Next One

This NYT piece is so confused it is difficult to know where to begin. It starts with student debt. Student debt is a serious burden for many recent grads and even more so for people who did not graduate. But how does it lead to a financial crisis? As the piece notes most of the debt is owed to the government. Also,defaults won't lead to the value of the underlying asset (earnings) spiraling downward.

Then we get corporate debt. Yes, this is high, but debt service as a share of corporate profi...

NYT Does a Timeline on the Financial Crisis and Never Mentions the Housing Bubble

Well, they couldn't see the housing bubble in 2007, why should they be able to see it today? It's sort of like reporting on the rain in North Carolina without mentioning Hurricane Florence. I guess the stories about the problems in getting qualified workers are accurate.

NYT Does a Time Line on the Financial Crisis and Never Mentions the Housing Bubble

Well, they couldn't see the housing bubble in 2007, why should they be able to see it today? It's sort of like reporting on the rain in North Carolina without mentioning Hurricane Florence. I guess the stories about the problems in getting qualified workers are accurate.

Trump and China: Stock Market Delusions

According to the Washington Post, Donald Trump thinks he is winning his trade war with China because of the decline in its stock market. Its stock market has declined 23 percent this year. If Trump thinks he is hurting China's economy because of this decline in its stock market he is even more ill-informed than is generally believed.

People often error in thinking that the stock market is a gauge of U.S. economic performance. In principle it is a measure of the future profits of U.S. corporat...

The Bailout Saved Us From a Second Great Depression and An Invasion From Mars

Yep, Catherine Rampell is touting the heroics of the bailout gang in saving us from a second Great Depression in her Washington Post column. She notes the anger directed against this gang on both the left and right and that people suspect their motives. (For those keeping score, the initial trio was Ben Bernanke, who is getting well over $1 million a year in consulting contracts with financial firms, Timothy Geithner, who is likely getting multiple millions as a top exec at a PE company, and...